Does My IT Services Firm Need a Managed Services Agreement?

Information technology (IT) firms often provide an outsourced IT department or solution for other businesses. Specifically, they monitor and maintain business systems and resolve IT issues as they arise. This provision of services is usually on an ongoing basis with a monthly or yearly fee. A managed services agreement should be used to set out the terms of this relationship and minimise disputes.

Set Realistic Expectations

To provide ongoing management of a business’ IT needs, your IT services firm will need permission to access the systems and networks remotely. If access is not possible, the assistance cannot be provided. Therefore, it is essential to set the expectation of access from the get-go. You should also include a warranty in the agreement, protecting all information and only allowing you to access the system for the purposes set out in the list of agreed services. This will give businesses more confidence when providing the access required.

A managed services agreement should also specify the services offered. For example, you should make it clear if you are not monitoring a piece of software or if the agreement does not cover hardware such as printers. If the business wants these services included, they can negotiate for their inclusion before signing. For anything not included, it is best to detail whether this can be dealt with for a further fee.

Another critical expectation to set is response time. If you are unable to respond to all enquiries within an hour, then you should not give this as a guaranteed response time. Instead, you may include a priority schedule which details different levels of IT events and their priority. Again, you should be as clear as possible in describing response times and priority levels. Setting realistic expectations is essential.

Create Customer Satisfaction

You should include in your agreement a list of the services provided and how they are to be provided. This way, your customer does not expect anything that was not agreed to and your firm knows what it must provide to meet expectations.

If expectations are met, then it is likely your IT firm’s customer business will be satisfied. In turn, this will lead to an increase in word of mouth marketing and positive online reviews. Ideally, it may also result in long-term retention of the customer and the acquisition of further customers.

Certainty on Revenue and Resource Requirements

One of the key clauses in any managed services agreement is the payment clause. This is because it provides certainty on how much you expect to receive from the business and when you expect to receive it. For example, if the customer has paid upfront for a year of service, then it is clear resources need to be provided to meet the agreed services for the next 12 months.

In this case, the customer should ensure there is enough revenue in the bank to cover this and other expenses. If the customer pays on a monthly basis, then you can expect the fees will hit the firm account each month. This means you have more clarity about how many resources you need in the coming months and how much money is coming in. This should help with developing a strong business plan.

Limit Your Firm’s Liability

If your IT services firm agrees to manage another business’ IT needs, then you will have obligations to fulfil. You need to make these obligations clear in your managed services agreement. Setting out which services you are including, and which you are not, ensures you and your customer have the same expectations. It also means you are not responsible for services outside of your offering.

It is then vital to limit liability to the agreed services and only in circumstances where serviceability is possible. For example, serviceability is limited where you cannot carry out your assistance because a customer denies access or forgets to allow access. Alternatively, environmental factors like a flood or fire may prevent the provision of services. Furthermore, there may be a malicious or intentional attempt to damage equipment in the business. You should include in your agreement that your IT services firm is not responsible for events outside of its control.

Key Takeaways

Your IT services firm should have a comprehensive managed services agreement to ensure you have the same expectations as your customer. Specifically, the agreement should include:

a list of the services offered to businesses;

response times;

payment; and

liability.

If you need assistance drafting a managed services agreement for your business, contact LegalVision’s IT lawyers on 1300 544 755 or fill out the form on this page.

Jacqueline is a Lawyer in LegalVision’s IT law team. She works with a range of clients including IT startups, established IT service providers and fast-growing e-commerce businesses. Jacqueline regularly assists her clients by reviewing and drafting their key business contracts and providing data and privacy advice.

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